The United States District Court of the Western District of Texas (Austin Division) recently held that Churchill Downs subsidiary website, Twinspires.com, is prohibited from accepting wagers from persons living in Texas.

Churchill Downs brought action against the Texas Racing Commission seeking a declaration that the Texas Racing Act’s in-person requirement, under which only a person inside the enclosure where a race meeting was authorized may wager on a race, violated the dormant Commerce Clause. The dormant Commerce Clause precludes states from enacting laws or regulations that excessively burden interstate commerce.

The Texas Racing Commission is a state agency charged with enforcing the statutory and regulatory provisions of the Texas Racing Act. Churchill Downs moved for permanent injunction to prevent the Texas Racing Commission from enforcing the Act to prohibit Texans from placing wagers on Twinspires.com. The in-person requirement has been on the books in Texas since 1986. Nevertheless, Twinspires.com continued to accept wagers from Texans through its website.

The court, Judge James R. Nowlin, presiding, found that the Act did not violate the dormant Commerce Clause and entered judgment for the Texas Racing Commission. With respect to the legitimate state interests furthered by the in-person requirement, Judge Nowlin remarked,

[E]very regulatory challenge that gambling has always posed to the state has been made that much more daunting by the advent of the internet. Gambling has always been addictive, but before the internet, at least the addicts had to go to the trouble of driving somewhere to place his bet. The internet allows the addict to get his fix 24/7/365, all without leaving the comfort of his own home . . . Along the same lines, underage patrons looking to get in on the action have always tried to evade detection with fake IDs and the like, but with the advent of the internet, all they need to place a bet is Dad’s credit card and date of birth . . . Finally, gambling—especially horse racing—has always attracted crooked individuals hoping to clean their money. With the advent of the internet, though, criminal elements are better able to hide behind the anonymity afforded by the computer screen.”

Churchill Downs has appealed this case to 5th Circuit Court of Appeals.